Question

On January 1, 20X1, Clinton purchased 70% of Warren's outstanding common shares. In acquiring this interest,...

On January 1, 20X1, Clinton purchased 70% of Warren's outstanding common shares. In acquiring this interest, Clinton paid a total of $1,400,000. Warren' net assets had a book value of $1,300,000 at the time. Warren's building with a ten-year life and a book value of $100,000 was worth $180,000. Any other excess amount was attributed to goodwill.

Clinton reports net income for 20X1 of $350,000 excluding any investment income from Warren, while Warren has $175,000 in earnings.

What is the amount of consolidated net income to the controlling interest?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Acquistion price 1400000
fair value 2000000
(1400000/70%)
Less:book value 1300000
Excess over book 700000
Allocated to Life Amortization
Buildings 80000 10 8000
Goodwill 620000
Income-warren 175000
Less:amortizaton 8000
net income 167000
Attributed to
clinton(70%) 116900
NI(30%) 50100
Consolidated net income
Clinton 350000
Share from warren 116900
Consolidated net income 466900
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $498,000 cash. The acquisition-date fair value of the noncontrolling interest was $55,300. At January 1, 2016, Star’s net assets had a total carrying amount of $387,100. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $56,000. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John’s net assets were $12,900,000. On July 1, 2021, Sweet paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sweet owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for...
On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $316,000. On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20X1 20X2 Net income $50,000 $90,000 Dividends 10,000 20,000 On January 1, 20X1, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is...
On January 1, 2019, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2019, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $612,000 cash. The acquisition-date fair value of the noncontrolling interest was $68,000. At January 1, 2019, Star’s net assets had a total carrying amount of $476,000. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $71,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of the noncontrolling interest was $50,600. At January 1, 2016, Star’s net assets had a total carrying amount of $354,200. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $51,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $547,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,800. At January 1, 2016, Star’s net assets had a total carrying amount of $425,600. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $61,600. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of C’s identifiable net assets was $600,000 and the book value of its shareholders’ equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition? $0 $150,000 $180,000 $300,000 Assume that Identifiable net...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of C’s identifiable net assets was $600,000 and the book value of its shareholders’ equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition? $0 $150,000 $180,000 $300,000 Assume that Identifiable net...
On January 1, 2017, Cheyenne Co. purchased 25,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Cheyenne Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,520,000. At the time, the book value and the fair value of John’s net assets were $13,400,000. On July 1, 2018, Cheyenne paid $2,900,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $14,600,000. As a result of this transaction,...
On January 1, 2006, Peter Company purchased 80 percent of the outstanding shares of Pedro Company...
On January 1, 2006, Peter Company purchased 80 percent of the outstanding shares of Pedro Company at a cost of P1,080,000. On that date, Pedro Company had P600,000 worth of ordinary shares and P750,000 worth of accumulated profits. For 2006, Pedro Company reported income of P270,000 and paid dividends of P90,000. All of the assets and liabilities of Pedro Company are at fair market value. On December 31, 2006, Peter Company sold equipment to Pedro Company for P112,500 that had...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT